Millions of households in England will pay even higher water bills than expected, after the competition regulator gave its final verdict on the industry’s spending plans for the coming years.
Five water companies had appealed to the Competition and Markets Authority to allow them to increase bills above what was initially allowed by Ofwat, the industry watchdog. On Tuesday, the CMA said it would allow them to increase annual bills by an additional 2.2% on average.
The five companies (Anglia, Northumbrian, Southern, Wessex and South East) together serve 14.7 million customers.
Thames Water, Britain’s biggest supplier with another 16 million customers, also initially appealed but then pulled out amid crisis talks to try to reduce its debt load and secure its future.
In England and Wales’ largely privatized water system, Ofwat sets the amount suppliers can charge customers over a five-year period. In December 2024 it said average annual household bills could rise 36% to £597 by 2030 to help pay for maintenance and investment.
However, the appellant companies had argued that they should be allowed to spend more than that to pay for upgrading their creaking networks of pipes, sewers and reservoirs.
The CMA said on Tuesday it would allow them to spend an extra £463m in revenue, 17% of the total extra £2.7bn the five companies had requested.
The extra spending will be funded by the 2.2% increase for customers, which is on top of the average 24% increase already allowed by Ofwat across those five businesses.
Water bills in England and Wales are expected to rise again by an average of £33 per household in April, in the latest rise above inflation. Last year’s annual increase was £123, at the start of the five-year period.
The decision could prove a political headache for Emma Reynolds, the environment secretary, after the industry’s ratings hit rock bottom last October amid record levels of sewage spills.
The pollution scandal has been thrust back into the spotlight in recent weeks after Channel 4 drama Dirty Business told the story of how private companies have been allowed to pollute Britain’s rivers and waterways.
An independent group of experts appointed by the watchdog had initially said they would allow £556m in extra spending in an interim decision in October, but have scaled back this in the months since.
Kirstin Baker, chair of the group, said: “We have rejected most of the increases requested by water companies, but have allowed limited additional funding where it is really needed, balancing concerns about affordability with the need to secure our water supplies and reduce pollution.
“A significant portion of this extra money reflects market movements since Ofwat’s decision.”
